Isra-Mart srl : Shipping and aviation carbon pricing could finance $100bn climate fund

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EU finance ministers have proposed that a system of carbon pricing for the shipping and aviation industries could pay for the $100bn a year climate fund agreed at last year's Cancun summit.

In a statement released after a meeting in Brussels earlier this week, ministers said raising the cash annually would be "challenging but feasible", adding that private sector money should make up a "major source of the necessary investments".

Ministers also suggested that imposing a global cap on emissions and forcing shipping and aviation companies that go beyond their limits to trade permits could contribute towards the fund at the same as incentivising those industries to curb emissions.

"The carbon pricing of global aviation and maritime transportation is a potential source of revenues that would also generate the price signal necessary to efficiently achieve emission reductions from these sectors," the statement says.

Both sectors have made little progress towards reaching an international agreement on how to reduce emissions, much to the EU's frustration.

Climate commissioner Connie Hedegaard said last month that the EU would not wait much longer for International Maritime Organisation (IMO) and International Civil Aviation Organisation (ICAO) to develop voluntary mechanisms for cutting emissions.

She added that the EU would push for shipping and aviation to be high up the agenda at the Durban climate summit in November and in any successor treaty to the Kyoto Protocol.

Despite the ICAO's pledge to establish a global framework for market-based mechanisms such as emissions trading by 2013, all flights to and from Europe will be brought into the EU's emissions trading scheme from next year, pending ongoing legal challenges.

The EU has threatened to extend the programme to cover shipping if a deal is not struck by the end of this year – a proposal that has divided the industry.

This week's statement further cranks up the pressure on both sectors, warning that "further work is needed in [the] IMO and ICAO to develop without delay a global policy framework that avoids competitive distortions or carbon leakage".